Government and Native American officials hoping to keep the Navajo Generating Station and its mine in operation are facing serious challenges.

Salt River Project, an owner and the coal plant's operator, says it needs a new lease by July 1 with the Navajo Nation, which owns the property near Page. Otherwise SRP says it must close the plant to allow enough time to tear it down and vacate Navajo land by Dec. 22, 2019, when the current lease expires.

SRP has offered to negotiate a new lease so that the plant could run another two and a half years, and utility officials said they would help a new owner run the plant beyond 2019.

But both the temporary extension and long-term hopes to run the plant are facing challenges. Here are 10:

1. Navajo approval

Navajo Nation leaders must approve legislation to extend the lease. Even though President Russell Begaye promised a group of miners gathered in Phoenix last week that would happen on May 19, the legislation was not introduced to the tribal council as planned.

Begaye and Navajo Nation Speaker LoRenzo Bates also have conflicting ideas about how the tribal lawmakers should handle the lease. Last week Bates told a group of officials meeting with the Interior Department that the lease would likely go through four council committees where it could be amended before going to the full council. Begaye later told the same group that he hoped the lease would warrant emergency status and not face any committees or amendments.

SRP has negotiated a rough outline of the lease on behalf of the other utilities that own the plant, and if the tribal council amends the lease, the other utility owners will have to approve any changes.

"If the plant doesn't have a short-term future, it doesn't have a long-term future," said Assistant Interior Secretary Scott Cameron, whose agency hopes to keep the plant open.

"Without federal subsidies, we don't see how a new owner can operate cost effectively," said Mike Hummel, deputy general manager for SRP.

"We have all owned and operated coal plants," he said of the utility owners. "We are all very good at it, and we are all not able to make it work. That's why the owners are choosing to exit. "

3. Time crunch

Lazard not only has a hard job, but little time. SRP officials said they need a new owner identified by Oct. 1 to begin negotiating transfer of the plant, or they'll need to proceed with plans to tear it down.

In a heated exchange with Navajo officials last week, Lazard managing director Juan Correa said the company couldn't identify specific potential buyers until as late as September. Bates and Begaye were frustrated that would leave 30 days to negotiate a complex transaction.

At the conclusion of the exchange, Correa fainted and was helped to a chair.

4. A $132 million maintenance bill

Any buyer will face about $132 million in routine maintenance on the plant that must be paid before 2019. SRP is running the plant with plans to close in 2019 and is foregoing some repairs that would be needed if the plant were to run longer.

If a buyer steps in and wants to take over in 2020, it will either have to pre-pay SRP to make those fixes on schedule, or take control of the plant with increased exposure to the repair costs. SRP officials said the plant is being run safely butsome maintenance is unnecessary if the plant is closing.

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The Navajo Generating Station 130 miles north of Flagstaff has been the center of environmental debate for almost 50 years. The plant was initially promoted in 1967 as a compromise to avoid building hydropower dams up- and downstream of the Grand Canyon.
Mark Henle/The Republic

Experts debated the accuracy of those claims and whether additional dams would affect the canyon, considering Glen Canyon Dam already controlled the flow of water into the canyon and Lake Mead was downstream.
Mark Henle/The Republic

But the Sierra Club didn’t necessarily want to see another coal plant built in the area. The group’s executive director, David Brower, had a tense exchange with Congressman Morris Udall in March 1967.
Mark Henle/The Republic

Coal was already being shipped across northern Arizona in a slurry pipeline that traveled about 275 miles to the now-closed Mohave Generating Station. But because using slurry to transport coal required significant amounts of water, the coal for the Navajo plant was to be transported by train. And the train was electric to prevent air pollution across the region.
Patrick Breen/The Republic

The Sierra Club wasn’t happy that the coal plant was built, either, as Brower said existing hydropower dams on the Colorado River could have done the job for which the coal plant was intended. The group continued to fight for environmental controls on coal plants across the region.
David Wallace/The Republic

“No human activity other than war causes so much total destruction of the land,” said a May 23, 1971 anti-coal ad in The Arizona Republic sponsored by Sierra Club and other environmental groups.
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5. Operating costs

The plant might sell at a bargain, but the costs to run it are substantial.

Considering SRP and the other utility owners would have to pay as much as $170 million to tear down the plant, they would likely agree to sell for very little.

"The actual capital cost to buy that plant would not be very much," Hummel said.

But the $132 million maintenance backlog is just the beginning. Each year, the plant requires about $100 million to $250 million in upkeep, and 2020 would be no different.

Begaye said he is frustrated with the "spin" SRP is putting on the plant's operations.

"If I wanted to buy it and I heard this presentation today, I would have serious concerns," Begaye said after the meeting with Interior where SRP detailed the expenses.

6. New customers

If someone buys the plant, they'll have to find new customers to take the power. The Bureau of Reclamation, which is under the Interior Department, uses its share of the electricity to run pumps on the Central Arizona Project canal. CAP management has said even if the plant remains open, the canal will rely on a more diverse power supply going forward.

SRP also already has replaced 60 percent of the power it gets from the coal plant through contracts for power from natural-gas plants, through 2028. SRP is saving money through these contracts compared with running the coal plant, and it's likely the other utility owners will make the same move.

7. Water issues

Tribes that get water from CAP don't want to pay a premium for coal power in their water bills.

While the coal plant and mine are economically important to the Navajo and Hopi tribes in northern Arizona, tribes in central Arizona get Colorado River water from CAP, along with Phoenix and Tucson.

Gila River Indian Community Chairman Stephen Roe Lewis told officials from the Navajo and Hopi tribes during the Interior Department meeting that the so-called CAP tribes want the best outcome for their neighbors in the north, but that they are not willing to overpay for water to support the coal plant beyond 2019.

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Charlotte Begay, 64, of Shonto, Ariz., breaks up coal with a pickaxe at the public loadout facility at the Kayenta Mine on Feb. 4, 2017. The mine's sole customer is the Navajo Generating Station, a coal-fired power plant near Page, Ariz. If the power plant shuts down it not only would impact plant workers, but coal miners as well.
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Gary Benally of Chinle, Ariz., tosses a piece of coal at the public loadout facility in the Kayenta Mine, Ariz., on Feb. 4, 2017. The Navajo and Hopi tribes in northeast Arizona depend on the free coal provided by the mine's operator, Peabody Energy of St. Louis.
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Members of the Navajo and Hopi tribes gather free coal at the Kayenta Mine in Black Mesa, Ariz. The mine ships 240 rail cars of coal every day to the Navajo Generating Station. Together, the mine and the power plant employ 750 workers. With the future of the plant uncertain, many are wondering what will happen to the region's economy if the plant shuts down.
Mark Henle/The Republic

Darryl Sahmea (right) searches for quality pieces of coal at the Kayenta Mine in Black Mesa, Ariz., on Feb. 4, 2017. Many Hopi and Navjo tribe members rely on the free coal to heat their homes with coal stoves in the winter months.
Mark Henle/The Republic

Some people drive hundreds of miles for the free coal provided at the Kayenta Mine by the mine's operator, Peabody Energy of St. Louis. Pickup trucks dot the landscape at the public coal loadout facility on Feb. 4, 2017.
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Al Lomayestewa carries a large piece of coal back to his truck at the public loadout facility at the Kayenta Mine. Peabody Energy, the mine's operator, allows tribe members to take coal for free. Many rely on the free coal to hit their homes during the winter.
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Environmental Manager Marie Shepherd speaks during a meeting on Feb. 2, 2017, at the Kayenta Mine. The mine provides coal to the Navajo Generating Station in Page, Ariz. The coal-fired power plant ranks among the to;p in the country for carbon emissions.
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Lewis Pavinyama, a retired mine supervisor, built a $30,000 backyard rodeo arena with money he made working at the mine for 40 years. He's pictured here in his arena outside of Kykotsmovi Village, Ariz., on Feb. 3, 2017.
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Eric Bronston, an environmental analyst, speaks during a meeting on Feb. 2, 2017, at the Kayenta Mine in Black Mesa, Ariz. The mine provides coal to the Navajo Generating Station. The power plant is responsible for haze over the Grand Canyon and other national parks.
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8. Environmental concerns

The environmental concerns that have threatened the coal plant in the past have not gone away. The Environmental Protection Agency still wants to see one of the three units shut down in 2019 and environmental controls added by 2030 if the plant runs beyond that date.

Even officials who hope to see the plant remain open, such as Begaye, talk about running it to 2029 on the assumption that adding the new pollution controls would be prohibitive. Environmental regulators also would need to approve of the new ownership structure.

9. Decommissioning costs

The decommissioning of the plant will need to be negotiated among new owners.

All owners share in the decommissioning costs, and if a new owner comes in to run the plant for 10 years or so, all of the owners who already have a financial responsibility to decommission the plant will have to negotiate with the new owner on how that cost will be split once the plant eventually closes.

Those discussions are already complicated because the Los Angeles Department of Water and Power is still responsible for some decommissioning expenses, even though LADWP sold its share of the plant to SRP in 2015.

Some of the things SRP is negotiating in the short-term lease extension are the portions of the plant, such as the railroad, that the Navajo Nation wants to retain. If a new buyer comes along by October, those details immediately would need to be renegotiated.

The plant owners also are responsible for reclamation of the mine.

10. Coal-plant foes

The public opposition to burning coal is not inconsequential. Environmental groups have challenged the operations of coal plants in the Four Corners area for decades and are highly likely to be involved if new owners try to keep the plant running.

Environmentalists could challenge the regulatory approvals from the EPA, the Interior Department's involvement and any number of other approvals needed to transfer ownership.

Even if new owners assume they could triumph against such legal challenges, the lawyers' fees represent yet another expense to take over the plant. And even if they can write that check, the threats present a challenge in finding a buyer for the power from the plant.